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All Rise: The Economic Case for Racial Equity

David Callahan

Seventy years ago, when leaders like James Conant were pushing for a meritocratic education system, they argued that narrow and entrenched privilege was the enemy of prosperity. Why? Because it gave the best opportunities to unexceptional rich WASPs while leaving America's best human capital off the table. Empowering such a small slice of the population also limited the growth of a strong middle and upper middle class. 

The changes that Conant and others ushered in led to a huge rise in college admission for Catholics and Jews, as well as smart kids from isolated and rural communities. Later, falling barriers for young women brought an even greater avalanche of new human capital into the economy. And a diversity push over the past two decades has brought more people of color into the circle of opportunity. The result, in general terms, has been a mass affluence the likes of which no nation in the world has ever seen.

Yet America remains far, far away from tapping all its human capital and realizing the benefits of having its populace operating at full potential. That is a key point of "All-In Nation," a new study by PolicyLink and the Center for American Progress. What's holding us back, in large part, is deep and persistent racial stratification and segregation. A large slice of our people are sidelined from meaningful opportunity.

Progressives often focus on how marginalization is bad for those who are marginalized. But "All-In Nation" argues -- as Conant did -- that the entire country pays a price, and that price will rise steeply in coming years:

if the racial disparities plaguing the country today hold constant as the United States becomes majority people of color, it will mean lower growth for our nation, lower wages for our people, as well as a lower standard of living. In short, we simply cannot maintain the American way of life we all believe in and cherish while at the same time leaving half the country behind. That is why we all have a stake in an economy that works better for everyone.
This is especially true given global trends, with America's principal competitor -- China -- racing to mobilize as much of its human capital as possible in order to economically dominate the 21st century. China is moving 250 million peasants into its cities and building the schools and universities to educate them. The leaders in Beijing know that among those millions of people who might otherwise spend their lives sowing crops are tomorrow's entrepreneurs, inventors, managers, and even Nobel Laureates. 
Think of a country like a high school: The larger your school, the more likely you'll have enough burly kids for a good football team and brainy kids for a top chess team. China is creating a bigger school.
The Chinese also know that 250 million more people living in cities and climbing into the middle class translates into a huge domestic market and a new era of consumer-led growth. 
Meanwhile, America's leadership seems blithely content to let millions of kids of color grow up in circumstances that will ensure they are essentially useless in a modern economy and barely have enough money to get by, much less become middle class consumers. Mass incarceration makes this problem even worse. It's not just that we're sidelining so many of our people from productive lives; it's also that, in the case of prisons, we're spending a fortune doing so -- diverting resources away from better uses. A number of U.S. states, most notably California, spend more on prisons than higher education. 
What would be the economic benefits of creating a more inclusive society? "All-In Nation" answers that question and the numbers are impressive:
If racial and ethnic di"erences were eliminated, the average total personal income in 2011 would have been 8.1 percent higher; our gross domestic product would have been at least $1.2 trillion higher; 13 million people would have been lifted out of poverty; federal, state, and local tax revenue would have increased by $192 billion; and the long-run deficit in Social Security would be reduced by more than 10 percent.
In other words, we're not talking about small change.
"All-Nation" includes a bunch of good policy ideas for breaking down racial barriers and creating more opportunity for everyone. But the greater contribution of the report is to remind us that -- when it comes to growth and prosperity -- we Americans are all in this together.